The Sikkim High Court said that when the reassessment notice itself is unlawful, which is issued without jurisdiction, or after the time limit specified under the Income Tax Act, the Court can examine the validity of the notice under Article 226, even though an appeal under the Act is available.
A Single Bench of the Sikkim High Court, Justice Meenakshi Madan Rai, held that the availability of another statutory remedy does not bar the exercise of writ jurisdiction under Article 226 where the challenge goes to the very jurisdiction of reassessment notice under Sections 148 and 149 of the Income Tax Act, 1961.
The Assessing Officer (AO), per Section 148 of the Act, has the authority to issue a notice if there is information specifying that income leviable to tax has not undergone assessment.
AO in this case has issued notice under section 148A(b) of the IT Act, grounded on the objections of the revenue Audit of Zydus Healthcare Ltd.(taxpayer) having escaped assessment u/s 147 of the Act.
A writ petition before the High Court has been filed by the taxpayer, as dissatisfied with the order passed under section 148A(d) and the consequential reassessment proceedings. The taxpayer, the notice reopening the assessment was issued after the limitation period and without jurisdiction.
Also, the taxpayer stated that the Excise Duty refund of ₹22.99 crore, considered by the assessing officer as a deposit for the objective of extending limitation, does not come within the description of an asset under the Explanation to Section 149, and hence, the reopening was time-barred and void ab initio.
HC sees the problem of whether the taxpayer can submit a plea u/s 246A(1)(b) against an order passed u/s 148A(d), and whether the existence of such an appeal automatically prevents a writ petition.
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The court mentioned that the rule of “alternative remedy” is not definitive and is only a case of judicial discretion, and specified that a writ can still be entertained when the taxpayer alleges that the reassessment notice is without jurisdiction, time-barred, or issued without fulfilling mandatory pre-conditions for reassessment.
The HC in the above findings has rejected the preliminary objection of the revenue and held the writ to be maintainable.
| Case Title | Zydus Healthcare Ltd. vs. ACIT |
| Case No. | WP(C) No.39 of 2022 |
| Counsel for Appellant | Mr Mukesh M. Patil, Mr Anup Kumar Bhattacharjee, Ms Babita Kumari |
| Counsel for Respondents | Ms Sangita Pradhan |
| Sikkim High Court | Read Order |
